That's what I've been trying to say Adam. I consult for hundreds of clients. We constantly run into various opinions from examiners. Therefore, if there's a "path of least resistance" that appeases the examiners and makes it easy for lenders to follow, we recommend this. Sure, I can argue for a client that the application process is over at such and such a time, but we still have to argue and may lose the argument.

I agree with chorham's approach, but 1) there may be a different opinion from an examiner and 2) what happens when you don't issue a commitment letter (i.e. commercial lending)? When are those types of loans approved? If you can draw a definitive line in the sand for every case, great. You probably can't.

Adam, I agree it would be the easiest way to train - but feel it is the easiest way to miss data collection as well. Outside of a perfect MLO (unicorn), they're not going to always remember to update visual DI if the applicant later comes is to drop something off or pick of their appraisal. If we have a wet signed doc later in the process after a telephone or internet application, does that mean we saw them? Are we going to ask the MLO? If our training says "we gather when we see the applicant up until closing for not in-person applications" will the examiner expect visual to be provided if there is a signed receipt of acknowledgement in the file?

Great discussion! This really goes to show how intricacies like this have to be tailored to a company's specific situation and processes. We don't do commercial, and I'm comfortable with our stance based on our processes, but it's not one size fits all.

Gila, that exact thought process was part of what made me decide on credit approval. A lot of the LOs are going to think this requirement is ridiculous (I mostly agree), so at least I have a bone to throw them by saying it could have been cut off prior to closing. This is so rare for us that it is an area I'm very worried about them remembering (or caring) enough to do, and it's very hard to audit. So I'll use anything I can to promote them doing it. In the end, I decided I'd rather have the more accurate LAR, and have to argue the point, than the less accurate one with the catch all stance.

Also, from a compliance perspective, taking the safest stance is obviously ideal in a perfect world, but from a business perspective, this does cost LOs time where they could be doing other things. Sure, it's not much, but little things like this add up, and each new little thing makes employees feel a little more burdened by compliance and less likely to put in their best effort complying. That all comes into play when you have to discuss the requirement, the options, your suggestion, and the possible repercussions with senior management.

"Also, from a compliance perspective, taking the safest stance is obviously ideal in a perfect world, but from a business perspective, this does cost LOs time where they could be doing other things."

Nail/hammer. I'm trying to figure out the best way to make it work so they have as little to do as possible, while compliant, and we can rely on our systems to accommodate. We're lucky enough to have a pretty astute system that allows for us to hardwire a lot of steps and inputs, but in areas like these (and the AUS results, denial reasons, etc.) we haven't found a way to make it easier for them. I like your idea of approval, though, for us... that's pretty late in the game as well. Need to put some more thought into it.

(I reached out to the CFPB and gotten "misunderstood" responses, so I'm still waiting for something more clarifying)

If you're still in the application process (even if you define that as still completing the application), then yes, you'll need to gather the DI if you meet with them in person. If there's evidence the applicant was in person with the LO, then yes, the examiner will expect the DI by the applicant or visual by the LO. "They're not going to always remember to update the DI" isn't really an acceptable excuse. There are requirements. You can't ignore them.

What we're discussing is when does the "application process" end. The discussion I had with the CFPB indicated this goes beyond having a completed application (per Reg B). I don't like this either, but again, I don't get to ignore regulatory regulatory requirements because they aren't easy.

I don't disagree that this costs LOs time. I hate this new requirement. Lots of regulatory requirements cost institutions time and money. I'm not sure how that's a reason to say you're not going to do it.


Here's another thing about the DI collection rules that don't make sense: if the application is not taken F2F and the customer marks "I do not wish", then you're done. But if they don't make "I do not wish" then the LO has to collect if they see them later. Or if the application is taken in person, and the applicant marks "I do not wish", then the LO must record DI on visual observation. If the applicant doesn't want to answer the DI questions, they should have that right - just like a non-F2F application.

I understand where you are coming from, GM, but I disagree. I would much rather say: "ask/collect it every time you see a customer in person before closing" than say "collect it here and here, but not here or here or there." As David points out, it would be much easier if we only had to ask for the information with the original application in alignment with Reg B, but the CFPB has been clear that they are talking about the "application process" rather than a "complete application" under Reg B - two different things. Therefore, the collection phase goes beyond the first conversation, and that opens up all kinds of potential problems.

From a management perspective, I've found it more effective to say "always do it" rather than tell them to collect it sometimes but not others.

And by the way, I love the comparison of a perfect MLO to a unicorn - they don't exist. ;-)

Agreed David - I had the same thought as we worked through our compliance procedures. Why did they make this differentiation between F2F and non-F2F applications??? Just makes compliance all that more difficult when you have inconsistencies like this in the rules.

The CFPB put out an announcement this morning announcing the end of the beta testing of the HMDA platform. At the end of the letter they state:
We encourage financial institutions to continue providing feedback on their experience using the HMDA Platform and to direct any questions regarding the HMDA Platform to HMDAHelp@cfpb.gov.

I also encourage everyone to provide feedback so we can get these issues resolved.

I hate to say this out loud, but the DI section of the application seems pretty clear and self-explanatory to me.
The F2F section is a logical extension which clarifies WHO marked the information . That is valuable to know if you're splitting hairs like the CFPB is wont to do.
While I appreciate David's opinion, barring an actual explanation/definition from the CFPB of what they consider the 'application process', it remains up to each bank to make the call and be ready to defend it.
For us that will be, as David called it in a post above, 'drawing a definitive line in the sand' and adhering to it, which is what we've been doing all along anyway.

I can't disagree with you Truffle. I'm just hoping the field examiners will too.

I want to revive part of this...

The Demographic Information form states at the bottom "To Be Completed by Financial Institution (for an application taken in person)". If we have a non-F2F app, is there a new consensus on whether we would report this as "No", "NA" or just blank? The CFPB's Not Applicable chart says only use NA for purchased loans and non-natural persons.

Just when I think I have a handle on this the live files start trickling in to make me second guess something I thought I knew...

We are still reporting as "NOT collected..." when nonF2F application. If we report NA and the applicant is an individual, then we get a validity error from our LAR software (QuestSoft). They note that the program was set up based on CFPB's validity errors, and their guidance that states that a LAR cannot be submitted with outstanding validity errors.

I think CFPB worded this very poorly...which is leading to issues: our SM LOS (Encompass) absolutely refuses to open these fields for nonF2F applications, which makes it export that field BLANK to our LAR and we have to manually change for each record. It's ridiculous.

I don't think there is a consensus yet.

See this thread: https://www.bankersonline.com/forum/ubbt...ion#Post2159356

Banker K, hopefully Encompass will address this issue in their soon to be released update? (oh...there's a unicorn! )

Banker K, I'm not familiar with Quest Soft, but don't you have an option to globally change a field? Or set up your import to always code a field the same way in the same circumstance (ie, if a field is blank, or perhaps if the app was not taken f2f, populate with '2')?

We do use Quest Soft. And I do believe there is a spot under Loan Records that does allow Group Edits. Now I've not tested this on it, but it may be something you can look into.

I've read from a well-respected consultant who posts frequently on this page that the CFPB said verbally to report "NA" for the "how collected" questions for all non-F2F applications. However, the CFPB chart on reporting NA does not support this. I'm still as confused on this as I ever was...

The consultant you reference has a direct and frequently used line to the CFPB. You are safe to go with the answer provided because it is a clarification of this specific question. I know I will be going with the answer given and am also pushing Encompass to acquiesce and fix their system to comply properly.